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March 2018
Queensland Economic Update
Chamber of Commerce & Industry
cciq.com.au
Queensland Economic Update March 2018
• GDP expanded 2.3% during calendar year 2017.
• QLD state final demand expanded 0.9% during the December qtr and 2.6% annually.
• Public sector activity has been strong in Qld with all tiers of government recording growth in consumption expenditure.
Queensland Economic Update: Summary
National Accounts
• Company profits rose to $322bn during calendar 2017.
• The mining sector contributes around one-third of all the business profits nationally.
• Mining gross profit margins remain high at 46%. Finance and insurance doubled to 19% in FY2017.
Business Indicators
• Unemployment rate rose to 6.1% in February.
• Despite jobs growth over the past quarter, the unemployment rate rose 0.2%.
• The best jobs market region across the state is the Darling Downs – Maranoa region (unemployment rate of 2.8%).
Labour Market
Queensland Economic Update March 2018
QLD State Final Demand
Australian GDP
Qld Household Expenditure
+2.6%12 months to Dec 2017
Source: ABS
2.4%12 months to Dec 2017
Source: ABS
1.5%12 months to Dec 2017
Source: ABS
Economic Data – State Final Demand
+ +
Queensland Economic Update March 2018
The Australian economy expanded +0.4% during the
December quarter, weighed down by private investment and
net exports. Annual growth for calendar 2017 slowed to a
disappointing +2.3%.
Household consumption expenditure expanded by +1.0% for
the quarter and +2.9% through the year. This rate of
expenditure growth continues a subdued trend over several
years now, restrained by the sluggish pace of household
income growth.
Public funded investment grew +2.9% during the quarter, led
by state government infrastructure investment. General
government expenditure was also +1.7% higher during the
December quarter.
Private sector investment was weaker following a -2.2%
decline in dwellings and engineering construction. The net
exports category weakened with the volume of exports falling
during the December quarter.
Queensland Economic Update: Gross Domestic Product
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
1987 1989 1992 1994 1997 1999 2002 2004 2007 2009 2012 2014 2017
Australian Gross Domestic ProductMoving Annual Total
External Contribution GNE GDPPer Cent
Year Ended June Source: ABS
Queensland Economic Update March 2018
Queensland Economic Data: State Final Demand
State final demand (SFD) lifted by a strong +0.9% during the December quarter. In annual terms, growth in SFD slowed to 2.6%.
Public sector consumption was the largest contributor to growth, responsible for over half of the increase. The growth in public consumption expenditure was strong across all tiers of government. Government funded investment meanwhile rebounded following strong declines in previous quarters.
Expenditure by the private sector was mixed in the past quarter. Household consumption expanded by +0.6% for the quarter and is +1.5% higher through the year to December. Private investment was -0.2% weaker during the quarter, impacted by lower infrastructure investment.
Key Indicators Q% Ch A% Ch
Household final consumption 0.6 1.5
Private Gross Fixed Capital Formation -0.2 3.9
Public Gross Fixed Capital Formation 2.1 -3.3
General Government Final Consumption 2.5 6.4
Queensland State Final Demand 0.9 2.6
Queensland Economic Update March 2018
Queensland’s goods and services trade surplus narrowed to $6.0 billion during the December quarter. The value of imports rose 3.2% during the quarter, while exports fell -4.1%.
The value of exports slumped due to a strong drop in the volume of exports (-6.4%). Disruptions to the supply of coal was a key factor behind this fall in volumes, with media reports suggesting up to 70 coal ships were queued at the Dalrymple Bay Coal Terminal in December. The volume of services exports also declined during the quarter (-1.1%)
The value of imported goods has been trending upwards since December 2016 after several years of weakness. As the Queensland economy has emerged from its economic slump, the value and volume of imports has started to rise in conjunction with economic activity.
Economic Update: Balance of Payments
-5
0
5
10
15
20
25
2012 2013 2014 2015 2016 2017
Trade Balance Goods + Services Exports
Goods + Services Imports
Source: ABS
$ Billion
Queensland - Balance on Goods and Services
-12
-8
-4
0
4
8
12
2012 2013 2014 2015 2016 2017
Services Exports Goods Exports
Source: ABS
Quarterly Per Cent Change
Quarterly Export Volumes - Queensland
Queensland Economic Update March 2018
Queensland Economic Data: Mining exploration
Minerals exploration expenditure across Queensland has slumped since its peak in 2012. Activity has recently begun to stabilize, rising from the second half of 2016.
Exploration investment has dropped by 75% since the peak in 2012, responding to steep declines in commodity prices – particularly coking coal and oil.
The rebound in commodity prices over the past year has helped arrest the declines in exploration expenditure.
As a leading indicator of future investment and production activity, the recent lift in activity is a positive sign that the mining industry has turned the corner and is looking to invest in new capacity.
While signs are pointing to future activity increasing, the recovery in exploration has only been modest and miners will not necessarily be rushing to accelerate major projects developments in the short term.
0
400
800
1200
1600
2003 2005 2007 2009 2011 2013 2015 2017
Minerals Exploration - Queensland Moving Annual Total
Coal Petroleum Total Exploration
Source: ABS
$m (Constant)
Y/E June
Queensland Economic Update March 2018
The latest business indicators data showed company
profits nationally rose 2.2% for the December quarter
on a 1.5% lift in sales income. Overall, company profits
rose to $322 billion for calendar 2017 (+20.6%).
The mining sector (+42%) was the biggest contributor
to the higher level of company profits, representing
60% of the increase during 2017. The combination of
higher commodity prices, rising export volumes and
lower expenditure on capital investment led to the
stronger outcome for the mining sector.
Other industries with double digit profit growth
included Manufacturing, Utilities, Wholesale trade,
Financial & insurance services, Rental, hiring & real
estate services, Professional, scientific & technical
services, and Administrative & support services.
Queensland Economic Update: Business Indicators
0
50
100
150
200
250
1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017
Gross Operating Profits, $ BillionMoving Annual Total
Mining Non-Mining
Source: ABS
0%
10%
20%
30%
40%
50%
60%
2001 2003 2005 2007 2009 2011 2013 2015 2017
Business Gross Operating Margins
Financial and Insurance Services Mining
Manufacturing Construction
Retail Trade
Source: ABS
Queensland Economic Update March 2018
Queensland Economic Data: Retail Trade
The Christmas and Boxing Day sales period provided a small boost to retail spending. The annual rate of growth accelerated from a very low rate of 0.2% in October, rising to 1.3% by January.
Despite the recent pick-up in the rate of growth, retail sales activity is still behind long run trends levels.
Behind the slow growth numbers is the slow growth in household incomes. As wages have stagnated, consumers in Queensland have cut back on discretionary spending – expenditure on the takeaway food and department store categories amongst the weakest performers.
With the rise in the number of people employed and the faster pace of population growth, we should see stronger retail numbers through 2018. An acceleration in wages growth would be another welcome boost.
3,000
3,500
4,000
4,500
5,000
5,500
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: ABS
Retail Trade - Queensland ($m, Trend))
-2
0
2
4
6
8
10
12
14
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018Source: ABS
Retail Trade - Queensland (Annual % Change)
Queensland Economic Update March 2018
• Queensland’s unemployment rate is one of the highest across Australia at 6.1%.
• Despite over 15,000 jobs being created since November 2017, the unemployment rate has crept up by 0.2% during this period of jobs growth.
• Population growth and rising workforce participation have led to growing numbers of unemployed.
• The best jobs market region across the state is the Darling Downs – Maranoa region (unemployment rate of 2.8%), while improvement needed for Queensland –Outback (12.6%).
Queensland Economic Update
Labour Market
4.9
5.7 6.1 6.2 6.0 5.8
4.44.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
New South
Wales
Victoria Queensland South Australia Western
Australia
Tasmania Northern
Territory
Australian
Capital Territory
National Rates of Unemployment
Source: ABS
Per Cent
State Average 5.5%
6.0
5.0 5.1
6.5
2.8
6.6
3.5
12.6
5.2
9.4 9.1
0.0
3.0
6.0
9.0
12.0
15.0
Brisbane Gold Coast Sunshine
Coast
Cairns Darling
Downs -
Maranoa
Fitzroy Mackay Queensland
- Outback
Toowoomba Townsville Wide Bay
Unemployment Rate (%), by Region (SA4)
February 2018
Source: ABS, Conus
State Average 6.1%
National Average 5.5%
Queensland Economic Update March 2018
With the number of jobs on the rise, the recent publication of the
Conus Trend Industry Employment data (which is based on the
ABS employment data) helps identify the regions and industries
which have contributed to the strong labour market outcomes.
Jobs growth remains heavily concentrated in the SEQ region,
registering 75% of the jobs growth in the past year and forms
70% of the total workforce.
Townsville was the best performing region outside SEQ, with
10,900 jobs created in the past year. Services sectors such as
health care, education and retail trade recorded the largest
gains.
Health care is the engine of growth amongst industry sectors
(+36,500 jobs). Most jobs were created in Greater Brisbane
(+21,300) with also strong increases in the Sunshine Coast
(+7,300) and Townsville (+4,600).
The Public administration and safety sector had the largest job
losses over the last year at 7,700 jobs.
Queensland Economic Update: Labour Market
Queensland Economic Update March 2018
Queensland Economic Data: Building Approvals
Since peaking through the middle of 2016, building
approvals in Queensland have dropped by roughly
20%, averaging 3,500 approvals over the past
twelve months.
In the context of the long term historical average,
monthly dwelling approvals have averaged roughly
3,200.
The recent lift in population growth will be needed
to help absorb the big number of apartments
expected to hit the market in the next year.
Nationally, building approvals have also eased off
since peaking in mid 2016. New South Wales and
Queensland have been the two states driving this
outcome.
In contrast, building approvals in Victoria have
surged off the back of the apartments segment
across inner-city Melbourne.
Building Approvals Correction
-
1,000
2,000
3,000
4,000
5,000
6,000
1990 1994 1998 2002 2006 2010 2014 2018
Bui
ldin
g A
ppro
vals
(C
ount
)Building Approvals - Queensland
Total (Trend)
Source: ABS
0
2000
4000
6000
8000
2000 2003 2006 2009 2012 2015 2018
Building Approvals - States
NSW VIC QLD SA WA
Source: ABS
Dwelling Units (Count)
March 2018
Queensland Economic Update
Chamber of Commerce & Industry
Contact Us375 Wickham Terrace, Spring Hill,Brisbane, QLD, 4000.
1300 731 988
www.cciq.com.au